Stability of stochastic optimal growth models

Nishimura, Kazuo; Stachurski, John

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Stability of stochastic optimal growth models

Date

2011

Authors

Nishimura, Kazuo

Stachurski, John

Abstract

Many economic models are now explicitly dynamic and stochastic. Their state variables evolve in line with the decisions and actions of individual economic agents. These decisions are identified in turn by imposing rationality. Depending on technology, market structure, time discount rates and other primitives, rational behavior may lead either to stability or to instability.